Appeal Details
Counselvise Citation
[2021] 108 COUNSELVISE.COM (IT) 7707 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 3 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-03-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2013-2014
Appeal Filed On
14-12-2017
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , $ BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.3071/CHNY/2017 ( / ASSESSMENT YEAR: 2013-14) M/S.SIVA VALLI VILAS JEWELLERS PVT.LTD. 152, KALATHEESWARAN KOIL STREET, PONDICHERRY- 605 001. VS THE DEPUTY COMMISSIONER OF INCOME TAX, PONDICHERRY CIRCLE-6(2), PUDUCHERRY. PAN: AARCS 2249B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. T.VASUDEVAN, ADVOCATE /RESPONDENT BY : MR.G.CHANDRABABU, ADDL.CIT /DATE OF HEARING : 25.02.2021 /DATE OF PRONOUNCEMENT : 31.03.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED CIT(A), PUDUCHERRY DATED 22.1 1.2017 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) DISMISSING T HE APPEAL IS CONTRARY TO LAW, ERRONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 2. THE CIT{A ERRED IN CONFIRMING THE DISALLOWANCE U NDER SEC.40(A)(IA) OF ` 16465887/-. 3. THE CIT(A FAILED TO APPRECIATE THAT THERE CAN BE NO DISALLOWANCE U/S. 40(A)(IA) , WHERE NO PAYMENT IS M ADE AND/ 2 ITA NO.3071/CHNY/2017 OR DEBITED IN THE BOOKS OF ASSESSEE AND HENCE THE DISALLOWANCE ON AN ASSUMED AMOUNT IS UNJUSTIFIED AN D UNTENABE IN LAW. 4. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAD NOT INCURRED THE AMOUNT AS EXPENDITURE TOWARDS MAKING C HARGES OF JEWELLERY FOR PAYMENT TO THE GOLDSMITHS AND ALS O NOT DEBITED THIS AMOUNT IN THE BOOKS, FOR THE OFFICER T O CONCLUDE THAT THE ASSESSEE HAS NOT EFFECTED TDS AND HENCE TH E DISALLOWANCE U/S.40(A)(IA) IS UNWARRANTED AND UNJUS TIFIED ON THE FACTS OF THE CASE. 5. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ASSESSEE HAD MADE PAYMENTS TO THE GOLDSMITHS FOR MAKING OF J EWELLERY AS PER THE AGREED TRADE NORMS AND WAS NOT JUSTIFIED IN ASSUMING THE WASTAGE IN THE MAKING AT JEWELLERY AS MAKING CHARGE AND DISALLOWING THE AMOUNT FOR NOT EFFECTING TDS BY THE ASSESSEE. 6. THE CIT(A FURTHER FAILED TO APPRECIATE THAT THE GOIDSMITH RETURNS ROUGHLY 94% OF THE GOLD AS JEWELLERY OUT O THE QUANTUM OF GOLD GIVEN FOR ORNAMENT MAKING THAT THE 6% IS AC CEPTED AS WASTAGE IN GOLD MAKING AND THERE WAS NO BASIS TO AS SUME THIS AS THE MAKING CHARGE AND HENCE THE DISALLOWANCE MER ELY ON SURMISES AND CONJECTURES IS WHOLLY UNJUSTIFIED AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 7. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT TH E MERE RELIANCE ON THE STATEMENT OF TWO GOLDSMITHS RECORDE D AT THE BACK AT THE ASSESSEE CANNOT BE THE BASIS TO VALIDAT E THE ASSUMPTION OF THE OFFICER THAT THE WASTAGE SHOWN BY ASSESSEE WAS THE MAKING CHARGES ON WHICH TDS WAS NOT EFFECTE D AND HENCE THE DISALLOWANCE U/S.4O(A)(IA) IS UNJUSTIFIED . 8. THE CLTA) WAS NOT JUSTIFIED IN IPSO FACTO ADOPTI NG THE VERSION OF THE OFFICER WITHOUT GIVING DUE CREDENCE TO THE FACTS PUT FORTH BY THE ASSESSEE THAT APART FROM THE ORNAM ENTS RETURNED BY THE GOLDSMITH OR PATHAR, THE ASSESSEE C ONSIDERS THE BALANCE AS WASTAGE, AS A MATTER OF BUSINESS PRUDENCE/COMMERCIAL EXPEDIENCY AND HENCE THE ASSUMP TION 3 ITA NO.3071/CHNY/2017 OF THE OFFICER TO TREAT THIS AS MAKING CHARGES IS B ASELESS AND THE DISALLOWANCE NEEDS TO BE CANCELLED. 9. THE CIT(A) WITHOUT APPRECIATING THE FACTUAL BASI S WAS NOT JUSTIFIED IN HOLDING THAT SECTION 194C IS APPLICABL E ON AMOUNTS THAT HAVE NEVER BEEN PAID OR DEBITED IN THE BOOKS A T MAKING CHARGES AND HENCE THE DISALLOWANCE U/S.4O(A)IA) IS UNTENABLE IN LAW. 10. THE CIT(A), IN ANY VIEW OF THE MATTER. OUGHT TO HAVE DULY CONSIDERED THE CONTENTIONS OF THE ASSESSEE IN THE P ROPER PERSPECTIVE AND HELD THAT THE DISALLOWANCE U/S.4O(A )(IA)IS NOT TENABLE BOTH ON FACTS AND IN LAW AND THUS ALLOWED T HE APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF GOLD AND SILVER JEWELLERY FILED ITS RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2013-14 ON 28.09.2013 DECLARING TOTAL INCOME OF ` 3,92,47,030/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED WASTAGE OF 6 755.29 GMS OF GOLD, WHILE MANUFACTURING GOLD JEWELLERY AN D HENCE, CALLED UPON THE ASSESSEE TO JUSTIFY CLAIM OF HUGE W ASTAGE WHICH WORKS OUT 6.2%, WHEN NORMAL WASTAGE IN THE IN DUSTRY IS AT 1%. IN RESPONSE, THE ASSESSEE SUBMITTED THAT AN AVERAGE PERCENTAGE OF WASTAGE IN THE MANUFACTURING OF ORNAM ENTS IS 6 TO 7% DEPENDING UPON TYPE OF ORNAMENTS MANUFACTUR ED AND 4 ITA NO.3071/CHNY/2017 HENCE, IT CANNOT BE SAID THAT THERE IS UNIFORM 1% W ASTAGE IN ALL GOLD ORNAMENTS. THE ASSESSEE FURTHER SUBMITTED THA T IT HAS SEPARATELY PAID MAKING CHARGES TO GOLDSMITH FOR WHI CH APPLICABLE TDS HAS BEEN DEDUCTED. THEREFORE, QUESTI ON OF ESTIMATION OF MAKING CHARGES BY TAKING WASTAGE IN LIEU OF MANUFACTURING CHARGES OVER AND ABOVE 1% PERCENTAG E IS INCORRECT. THE ASSESSING OFFICER, HOWEVER, WAS NO T CONVINCED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND ACCORDING TO HIM, THE ASSESSEE HAS CLAIMED EXCESSIVE WASTAGE, WHILE MANUFACTURING GOLD ORNAMENTS OVER AND ABOVE 1% AND ACCORDINGLY, OPINED THAT THE ASSESSEE HAS RETAINED GOLD WITH GOLDSMITH IN LIEU OF MAKING CHARGES, WHICH IS IN TH E NATURE OF LABOUR CHARGES COMES UNDER THE PURVIEW OF WORKS CON TRACT AS DEFINED UNDER SECTION 194C OF THE ACT. THE ASSESSI NG OFFICER HAS TAKEN SUPPORT FROM STATEMENT OF GOLDSMITHS IN S UPPORT OF HIS FINDINGS, WHERE THEY HAVE STATED THAT THEY WILL DELIVER 94 GMS OF GOLD OUT OF 100 GMS RECEIVED BY THEM FOR M AKING ORNAMENTS. ACCORDINGLY, REJECTED THE ARGUMENTS OF T HE ASSESSEE AND TREATED EXCESSIVE WASTAGE CHARGES OVER AND ABOVE 1% AS MAKING CHARGES. SINCE THE ASSESSEE HAS SHOWN 5 ITA NO.3071/CHNY/2017 WASTAGE OF 6755.29 GMS OF GOLD, AFTER ALLOWING 1% OF WASTAGE, BALANCE 5669.527 GMS OF GOLD, HAS BEEN TREATED AS M AKING CHARGES AND AFTER TAKING PREVAILING MARKET RATE OF GOLD WHICH WAS 2837.55 GMS GOLD HAS ESIMATED MAKING CHARGES OF ` 1,64,65,887/- AND DISALLOWED THE SAME U/S. 40(A)(IA ) OF THE ACT FOR NON-DEDUCTION OF TDS U/S.194C OF THE ACT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). BEFO RE THE LEARNED CIT(A), THE ASSESSEE HAS REITERATED ITS SUB MISSIONS MADE BEFORE THE ASSESSING OFFICER AND ARGUED THAT ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS ESTIMATED M AKING CHARGES ON THE BASIS OF EXCESSIVE WASTAGE QUANTIFIE D BY HIM IS PURELY ON ASSUMPTION AND SUSPICION, WITHOUT THERE B EING ANY MATERIAL FACTS TO PROVE THAT THE ASSESSEE HAS PAID MAKING CHARGES BY RETAINING GOLD WITH GOLDSMITH. 5. THE LEARNED CIT(A), AFTER CONSIDERING THE RELEV ANT SUBMISSIONS OF THE ASSESSEE AND HAS ALSO TAKEN NOTE OF FACTS BROUGHT OUT BY THE ASSESSING OFFICER HELD THAT TH E ASSESSEE HAS ALLOWED GOLDSMITHS TO TAKE MAKING CHARGES IN TH E FORM OF 6 ITA NO.3071/CHNY/2017 GOLD BY RETAINING 6 GMS GOLD TOWARDS MAKING CHARGES , WHICH IS EVIDENT FROM THE FACT THAT WHEN 100 GM OF GOLD IS GIVEN TO GOLDSMITH, THEY HAD RETURNED 94 GMS OF GOLD ORNAMEN TS. THE LEARNED CIT(A) FURTHER OBSERVED THAT GOLDSMITHS HAV E CLEARLY STATED IN THEIR STATEMENT THAT THEY GET 5 TO 6% IN LIEU OF WAGES FOR MAKING CHARGES. ALTHOUGH, THE ASSESSEE HAS FILE D AN AFFIDAVIT FROM GOLDSMITHS STATING THAT 6% WASTAGE I S NORMAL PRACTICE IN THIS LINE OF TRADE, BUT AFFIDAVIT FIL ED BY THE GOLDSMITHS ARE STEREO TYPED WHICH MEANS THE ASSESSEE HAS OBTAI NED AFFIDAVIT FROM GOLDSMITHS TO SUPPORT ITS ARGUMENTS. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS BROUGHT OU T CLEAR FACTS TO THE EFFECT THAT AVERAGE WASTAGE IN THIS LINE OF BUSINESS IS 1%, WHEREAS THE ASSESSEE HAS CLAIMED WASTAGE OF 6.2% W HICH IS VERY HIGHER, WHEN COMPARED TO INDUSTRIAL PRACTICE. THEREFORE, HE OPINED THAT WASTAGE ALLOWED TO GOLDSMITHS WHILE MAKING ORNAMENTS IS NOTHING BUT MAKING CHARGES, WHICH WA S PAID IN LIEU OF CASH, HENCE, THE SAME NEEDS TO BE CONSIDERE D AS SERVICE CHARGES FOR MANUFACTURING OF JEWELLERY. HE FURTHER NOTED THAT ONCE HAVING CONSIDERED THAT WASTAGE ALLOWED BY THE ASSESSEE TO GOLDSMITHS IS IN LIEU OF MAKING CHARGE S, THEN NEXT 7 ITA NO.3071/CHNY/2017 QUESTION WOULD BE UNDER WHAT SECTION SAID PAYMENTS TO BE SUBJECTED TO TAX DEDUCTION. THE LEARNED CIT(A), AFT ER TAKING NOTE OF THE PROVISIONS OF SECTION 194C AND EXPLANAT ION, OPINED THAT WORK SHALL INCLUDE MANUFACTURING OR SUPPLYIN G A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER. IN T HE CASE OF THE ASSESSEE WORK HAD BEEN CARRIED OUT BY GOLDSMITH AS PER SPECIFICATION OF THE ASSESSEE AND FURTHER, MATERIA L HAS BEEN PURCHASED AND GIVEN BY THE ASSESSEE TO GOLDSMITH . THEREFORE, AS PER SECTION 194C(2) OF THE ACT, TDS HAS TO BE D EDUCTED, EVEN IF A SUM IS PAYABE BY ANY OTHER NAME OR ACCOUN TED UNDER ANY OTHER HEAD IN THE BOOKS OF ACCOUNT. ACCORDINGL Y, OPINED THAT THERE IS NO ERROR IN THE REASONS RECORDED BY T HE ASSESSING OFFICER TO ARRIVE AT THE CONCLUSION THAT EXCESS WAS TAGE ALLOWED BY THE ASSESSEE IS NOTHING BUT MAKING CHARGES, WHIC H ATTRACTS PROVISIONS OF SECTION 194C AND THUS, FOR NON-DEDUCT ION OF TDS, THE SAME NEEDS TO BE DISALLOWED U/S.40(A)(IA) OF TH E ACT. 6. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE U/S.40(A)(IA) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THERE 8 ITA NO.3071/CHNY/2017 CAN BE NO DISALLOWANCE, WHERE NO PAYMENT IS MADE AN D/OR DEBITED INTO BOOKS OF ACCOUNT OF THE ASSESSEE. THE LEARNED AR FOR THE ASSESSEE FURTHER SUBMITTED THAT ADDITIONS M ADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CI T(A) IS PURELY A GUESS WORK ON ASSUMPTION, WITHOUT THERE BE ING ANY EVIDENCE TO PROVE THAT ASSESSEE HAS PAID MAKING CHA RGES IN THE FORM OF GOLD. THE ASSESSEE HAS FILED ALL EVIDEN CES TO PROVE THAT MAKING CHARGES IN THIS LINE OF INDUSTRY IS BET WEEN 5 TO 6% AND SAID PERCENTAGE IS DEPENDS UPON TYPE OF ORNAMEN TS MANUFACTURED BY THE ASSESSEE. THE ASSESSEE HAS ALSO OBTAINED AFFIDAVIT FROM GOLDSMITHS, WHERE THEY HAVE CLARIFIED THAT NORMAL WASTAGE IN MANUFACTURING OF GOLD ORNAME NTS IS 6 TO 7%. THEREFORE, THERE IS NO MERIT IN THE REASONS GIV EN BY THE ASSESSING OFFICER THAT ASSESSEE HAS PAID MAKING CHA RGES IN FORM OF GOLD AND SUCH PAYMENT ATTRACTS TDS PROVISIO NS U/S.194C OF THE ACT. IN THIS REGARD, HE RELIED UPON DECISION OF ITAT., MUMBAI IN THE CASE OF INTERACTIVE AVENUES ( P) LTD. VS. DCIT (2021) 124 TAXMANN.COM 126 AND THE DECISION OF ITAT., DELHI IN THE CASE OF GREEN VALLEY TOWER PVT.LTD. V S. ACIT (2021) (1) TMI 737 ITAT DELHI. 9 ITA NO.3071/CHNY/2017 7. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING THE ORDER OF THE LEARNED CIT(A), SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) HAVE BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT THE ASSESSEE HAS CLAIMED EXCESSIVE WASTAGE, WHILE MANUFACTURING GOLD ORNAMENTS WHICH IS OVER AND ABOVE INDUSTRY AVERAGE AND THUS, SAME NEEDS TO BE CONSIDERED AS MAKING CHARGES PAID TO GOLDSMITHS FOR MANUFACTURING GOLD ORNAMENTS. THE DR FURTHER SUBMIT TED THAT THE ASSESSING OFFICER HAS ALSO RECORDED STATEMENT F ROM GOLDSMITHS, WHERE THEY HAVE STATED THAT THEY RETAIN 5 TO 6 GMS. GOLD FOR EVERY 100 GMS GOLD FOR MAKING CHARGES. THE REFORE, THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT ADDITIONS MADE BY THE ASSESSING OFFICER IS ON ASSU MPTION AND SURMISES MANNER. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE PROVISIONS OF SECTION 194C IS APPLICABL E, WHEN THE ASSESSEE HAS PAID OR CREDITED ANY CHARGES COVERED T HEREUNDER. IN CASE, NO PAYMENT IS DEBITED OR CREDITED TO RESPE CTIVE PARTIES ACCOUNT, THEN SUCH PAYMENT CANNOT BE CONSIDERED WIT HIN THE 10 ITA NO.3071/CHNY/2017 AMBIT OF SECTION 194C OR ANY OTHER TDS PROVISIONS. IN THIS CASE, THE ASSESSEE HAS NEITHER DEBITED MAKING CHARGES INT O PROFIT AND LOSS ACCOUNT NOR CREDITED ANY AMOUNT TO THE RE SPECTIVE PARTIES ACCOUNT. THEREFORE, WHEN NO PAYMENT IS MADE OR AMOUNT IS CREDITED TO RESPECTIVE PARTIES ACCOUNT, T HEN QUESTION OF APPLICATION OF PROVISIONS OF SECTION 194C DOES N OT ARISE AT ALL. BE THAT AS IT MAY, BUT FACT REMAINS THAT THE ASSES SING OFFICER HAS MADE ADDITIONS TOWARDS MAKING CHARGES ON ESTIMA TION BASIS BY TAKING WASTAGE CLAIMED BY THE ASSESSEE IN THE PROCESS OF MANUFACTURING GOLD ORNAMENTS. ACCORDING TO THE ASSESSING OFFICER, AVERAGE WASTAGE IN MANUFACTURING GOLD ORNAMENTS IS AT 1% WHEREAS, THE ASSESSEE HAS CLAIME D 6.2% WASTAGE. THEREFORE, HE HAS COMPUTED EXCESSIVE WASTA GE OF 5% AND TREATED THE SAME AS MAKING CHARGES PAID FOR MANUFACTURING OF GOLD ORNAMENTS. TO ARRIVE AT SUCH CONCLUSION, HE HAS RELIED UPON STATEMENT RECORDED FROM GOLDSMIT HS, WHO HAD INVOLVED IN MANUFACTURING OF GOLD ORNAMENTS. 9. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E ARGUMENTS ADVANCED BY THE LEARNED AR FOR THE ASSESS EE IN LIGHT OF FACTS BROUGHT OUT BY THE ASSESSING OFFIC ER AND FIND THAT 11 ITA NO.3071/CHNY/2017 THERE IS NO MERIT IN THE REASONS GIVEN BY THE ASSE SSING OFFICER TO TREAT EXCESSIVE WASTAGE AS MAKING CHARGES. FURTH ER, THERE IS NO UNIFORM YARDSTICK TO QUANTIFY MAKING WASTAGE IN ANY PROCESS OF MANUFACTURING OF GOODS, INCLUDING MANUFACTURING OF GOLD ORNAMENTS. BUT, IT ALL DEPENDS UPON NATURE OF GOODS MANUFACTURED OR TYPES OF GOLD ORNAMENTS MANUFACTUR ED BY THE PARTIES. THE ASSESSING OFFICER HAS CONSIDERED 1% WA STAGE AND TO SUPPORT HIS STAND TAKEN STATEMENT FROM GOL DSMITHS, WHERE THEY HAVE STATED THAT THEY HAVE RETURNED 94 G MS OF GOLD OUT OF 100 GMS GOLD RECEIVED FROM THE ASSESSEE. EXC EPT THIS, NO OTHER INDEPENDENT EVIDENCE WAS BROUGHT ON RECORD TO SUPPORT HIS FINDINGS. ON THE OTHER HAND, THE ASSESS EE HAS FILED AFFIDAVIT FROM GOLDSMITHS TO SUPPORT ITS ARGUMENTS, WHERE THEY HAVE CLEARLY STATED THAT NORMAL WASTAGE IN MANUFACT URING OF GOLD ORNAMENTS IS BETWEEN 6 TO 7%. THEREFORE, WE A RE OF THE CONSIDERED VIEW THAT ASSESSING OFFICER AS WELL AS LEARNED CIT(A) ERRED IN ASSUMING WASTAGE CHARGES AT 1% WITH OUT ANY EVIDENCE TO SUPPORT THEIR STAND, IGNORING SPECIFIC EVIDENCES FILED BY THE ASSESSEE TO PROVE THAT NORMAL WASTAGE INCURRED WHILE MANUFACTURING GOLD ORNAMENTS WAS AT 6 TO 7% . IN OUR 12 ITA NO.3071/CHNY/2017 CONSIDERED VIEW, THE ASSESSING OFFICER HAS QUANTIFI ED EXCESSIVE WASTAGE PURELY ON ARBITRARY AND SUSPICIOU S MANNER, WHICH CANNOT BE JUSTIFIED IN THE GIVEN FACTS AND CI RCUMSTANCES OF THE CASE. FURTHER, THE ASSESSE HAS ALSO PRODUCE D NECESSARY EVIDENCES TO PROVE THAT IT HAS SEPARATELY PAID MAK ING CHARGES TO GOLDSMITH AND FURTHER, DEDUCTED TDS, WHEREVER AP PLICABLE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) WERE ERRED IN ESTIMATING MAKING CHARGES MERE RELYING UPON STATEMENTS OF TWO GOLDSMITHS RECORDED AT THE BACK OF THE ASSESSE, EV EN THOUGH THE ASSESSEE HAS DEMONSTRATED WITH EVIDENCES THAT S TATEMENT GIVEN BY GOLDSMITHS WAS INCORRECT. FURTHER, THE LEARNED CIT(A) WAS ALSO NOT JUSTIFIED IN IPSO FACTO , AFFIRMING VERSION OF THE ASSESSING OFFICER WITHOUT GIVING DUE CREDENCE TO T HE FACTS PUT FORTH BY THE ASSESSEE. FURTHER, WASTAGE ALLOWED BY THE ASSESSEE TO GOLDSMITHS IS AS A MATTER OF BUSINESS P RUDENCE /COMMERCIAL EXPEDIENCY AND THE SAME CANNOT BE CALL ED UPON TO QUESTION BY THE ASSESSING OFFICER UNLESS, HE H AD EVIDENCE TO PROVE THAT THE SAME IS EXCESSIVE. FURTHER, CASE LAWS RELIED ON THE ASSESSEE IN THE CASE OF INTERACTIVE AVENUES (P) LTD. VS. 13 ITA NO.3071/CHNY/2017 DCIT (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE THAT UNLESS DEDUCTION IS CLAIMED FOR ANY EXPENDITURE, THE PROVI SIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE PRESSED INT O SERVICE AT ALL. THE ITAT., DELHI IN THE CASE OF GREEN VALLEY TOWER PVT.LTD. VS. ACIT (SUPRA) HAS TAKEN A SIMILAR VIEW AND HELD THAT IF ASSESSEE HAS NOT CLAIMED DEDUCTION FOR ANY EXPENDIT URE, THEN THE PROVISIONS OF SECTION 40(A)(IA) CANNOT BE INVO KED TO DISALLOW SUCH PAYMENTS. 10. IN THIS VIEW OF THE MATTER AND CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRM ED BY THE LEARNED CIT(A) TOWARDS ESTIMATED MAKING CHARGES BY TREATING WASTAGE CLAIMED BY THE ASSESSEE IN PROCESS OF MANUF ACTURING GOLD ORNAMENTS IS PURELY ON SUSPICIOUS AND CONJECT URE MANNER WITHOUT THERE BEING ANY MATERIAL EVIDENCE AND HENCE , ADDITIONS MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TDS U/S.194C OF THE ACT CANNOT BE SUS TAINED. HENCE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE ADDITION MADE U/S.40(A)(IA) OF THE ACT. 14 ITA NO.3071/CHNY/2017 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA) ' % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER ' /CHENNAI, ( / DATED 31 ST MARCH, 2021 DS *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .
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